Thank you so much Heidi for taking the time to write about yours and Josh’s Retirement! You guys are a great example of a couple who understands the importance of being financially stable and prepared… We can all learn a lot from you! Thank you!
In Heidi’s words…
I remember when I was in college, one of my business professors asked the class, “How many of you have a retirement set up already?” Out of 40+ students only two raised their hands, and I was definitely not one of them. I was 20 years old at the time and my biggest concern in life was playing soccer for my college team and getting through school. I didn’t even have a “real” job yet, so why did I need a retirement? Retirement is for older people who have established a career, bought a house, have a bunch of kids, and maybe even grandkids!
It wasn’t until I began my career as a hair and makeup artist that I realized the importance of saving for a retirement. As a self-employed person, I was in charge of EVERYTHING regarding finances. I didn’t have taxes taken out of my “paycheck” and I sure as heck didn’t have a built-in 401k that my employer and I contributed to. Because my job requires me to stand on my feet for long periods of time, I knew that I wasn’t going to be able to be a hair and makeup artist until I was 65. I mean, who would want to hire a 65-year-old wrinkly makeup artist anyways, right?
At that moment I evaluated my long-term goals, and knew I needed to do something about it. After sitting down with an expert in the financial world, I was able to calculate the amount of money I’d need to retire at a younger age. I was shocked at the number. Can you guess it?
…. If I wanted to even consider retiring at 55 years old, I needed close to 3 million dollars. MILLION! … THREE OF THEM!
In my little brain I thought that $200,000 would be a lot of money to retire with. NOT! Think about it. If I retired at 55 years old, I’d still have at LEAST 20-25 more years to live, assuming I stayed in good health and didn’t have an accident and croak. And let me tell you, when I imagine my retirement years I imagine traveling, enjoying life, blessing my kids and grandkids, etc. The time that you used to spend working will now be free time, and in your boredom you will want to spend your money on things like I mentioned. All of that takes money… And lots of it. Not to mention that in the next 30-40 years the cost of living will be vastly different than it is now. At that rate, I probably need FOUR million to retire just to be able to live comfortably. Crazy, right?!
But it doesn’t stop there. Setting a goal requires action. Initially it pained me to have to take money out of my “paycheck” every month to contribute to my Roth account. I also contribute to two separate bond funds to save for a new car in the next 5 years, as well as a down payment on a home.
Our culture nowadays wants instant gratification, and I’m guilty of that too. We want to contribute $25 and see it multiply to that 3 million tomorrow. NOT GONNA HAPPEN PEOPLE!! After doing all the calculations, though, I regret not starting sooner. Even if I could only have afforded to contribute $25 a month at 20 years old… I wish I would have. Now that I’m almost 30 I have to contribute MORE monthly just to catch up for the years I didn’t put that $25 in.
On a side note, my husband has a “normal” job and works for the government. We decided that even though he does have retirement through work, we thought it would be a good idea to open a separate retirement account with Primerica as well. We realized we didn’t want all of his eggs in one basket, so now we have three total retirement accounts between the both of us. Yes, THREE! That may sound ridiculous, but we’d rather be safe than sorry.
Hopefully we won’t even need all the money we will have by the time we retire. In that case we can leave a substantial inheritance for our future children. Regardless though, we now have the financial peace of knowing that our ducks are in a row for later in life. We are doing the work NOW so we aren’t a burden to our children. Not only are we saving for retirement, but we are also saving for a retirement home when that time comes too.
Being financially independent at all ages is a big goal of ours, and we are taking the steps now to get there. Don’t be that 55 year old wishing you could retire in 5-10 years and feel helpless because you didn’t plan for it. Be proactive and responsible. If you’re retirement plan involves winning the lottery, good luck to you! I’d rather invest those few dollars it cost to play the Powerball in an account that is guaranteed to give me a huge return later. Stop waiting and stop “thinking” about it. GO SET UP YOUR RETIREMENT ACCOUNT. Although it’s never too late to start, you will ALWAYS wish you had started sooner.